Japan's stock benchmarks are headed for their worst month since July after NEC Corp and Toshiba Corp said they expect demand for computer-related products to decline in the second half of the fiscal year.
Hitachi Ltd, Fujitsu Ltd and Advantest Corp are among companies reporting earnings next week. Investors will also monitor an economic package by the government aimed at countering a financial crisis as banks struggle to get rid of some US$420 billion in bad loans.
"Technology companies still remain vulnerable to slowing external demand, which makes it hard to buy them as long-term investments," said Minoru Kikuchi, who helps manage US$4.1 billion of Japanese stocks at Citigroup Asset Management in Tokyo. "I need to know what exactly the government intends to do about banks and the economy before I make any big bets."
In other markets, Taiwan stocks may drop as Asustek Computer Inc (華碩) may report third-quarter earnings below analyst expectations.
South Korea's Chohung Bank and other lenders may rise on a report the government plans to sell part or all of its 80 percent stake.
Singapore Airlines Ltd. may gain after Asia's most profitable carrier said first-half profit rose fivefold.
For the week just ended, the Nikkei 225 Stock Average lost 4 percent to 8,726.29, reversing the previous week's 6.5 percent gain. The average lost 7 percent in October, on course for its biggest monthly drop since July. The Topix index declined 2.5 percent to 871.89, rounding off a 5.3 percent drop this month.
Asian stocks may get a boost from the US, where the Standard & Poor's 500 Index, Dow Jones Industrial Average and the NASDAQ Composite Index had their third week of gains, boosted by rising earnings at companies such as Microsoft Corp and Citigroup Inc For the week, the S&P 500 and Dow rose 1.5 percent while the NASDAQ gained 3.4 percent.
Still, new orders of US durable goods dropped 5.9 percent, the biggest decline since November, led by fewer bookings for autos, airplanes and computers, a Commerce Department report showed. Falling consumer confidence may influence spending. The University of Michigan's final sentiment index for October fell to 80.6, from 86.1 in September, people with access to the report said.
In Asia, some investors are skeptical about NEC and Toshiba's outlooks even after both companies narrowed their losses for the second quarter ended Sept. 30.
NEC, Japan's biggest maker of telecommunications equipment, stuck to its annual profit and revenue forecast on Friday. It said second-quarter personal-computer sales fell 11 percent while mobile-phone sales plunged 45 percent.
Toshiba, the world's No. 2 chipmaker, pared its estimate for full-year sales on lower demand for factory equipment and home appliances. For the quarter ended Sept. 30, it posted a loss twice as wide as forecasts by analysts surveyed by Bloomberg News.
Fujitsu, Japan's biggest business computer maker, will report on Tuesday, while Hitachi, Japan's No. 1 maker of electronics, is expected to report on Thursday.
The Japanese government will reveal its economic package to fight sliding prices and deal with bad loans either Wednesday or Thursday, Chief Cabinet Secretary Yasuo Fukuda said Friday.
Japan's seven biggest banks told their newly appointed regulator to back down on proposals for cleaning up bad loans, saying the plan would force them to come under state control.
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